The "Set Off" Insurance Company Scam

September 22, 2009by Steven Gursten

This “set off” scam allowed Progressive Insurance Company to cheat a young school teacher who was critically injured in a very serious car accident. Beware, because your insurance company may have policy language allowing it to pull the same scam on you.

My client Amie Carducci was only 28 when she was struck nearly head-on by an uninsured driver. She had 13 surgeries, including an emergency six-level fusion surgery to her lumbar spine immediately following her auto accident. Amie spent nearly a month in the hospital, and has no memory of the crash due to her traumatic brain injury. Before her crash, Amie was a serious athlete and runner. She is a very sweet young woman who was beginning a career as a teacher.

Adding insult to (life-threatening) injury, the driver who hit Amie was uninsured did not have auto insurance. Luckily, Amie had purchased uninsured motorist coverage (UM). UM coverage is supposed to protect someone if she is injured in a car accident by an uninsured driver. Amie, like tens of thousands of Michigan residents, thought that it would protect her in such a case.

Worthless Uninsured Motorist Coverage

But the UM coverage Amie had purchased from Progressive was worthless. It was completely illusory. What Amie didn’t know was that Progressive had a policy allowing it to “set off” (or subtract) the medical expenses and wage loss Amie’s worker’s compensation carrier had paid Amie before paying out the uninsured motorist coverage. In other words, Progressive could subtract medical bills and wage loss being paid by another company before paying her uninsured motorist coverage.

End result: Amie got nothing – $0 – for all of her injuries, pain and suffering, and surgeries from being hit by an uninsured driver.

This makes the Progressive policy that Amie Carducci purchased completely worthless. It means Progressive and other Michigan insurance companies can pocket the extra premiums they charged for these policies. And the protection itself is completely deceptive, even fraudulent.

If someone isn’t hurt badly, the insurance company can file a motion for summary disposition and have the case dismissed under Michigan’s harsh automobile accident threshold law. But if someone is badly injured, the auto insurance company can deduct the wage loss and medicals from the UM or underinsured motorist coverage (UIM) and pay out nothing!

Sound too awful to be true? It’s not.

Amie’s serious injuries and medical bills created the “set off” that cheated her of the “uninsured motorist coverage” she specifically paid for to protect her in event of a serious personal injury to begin with. Again, Amie received nothing from Progressive Insurance Company, the auto insurance company that she had been paying all that money for basic auto insurance and uninsured motorist coverage for so many years.

This means every person that buys UM and UIM from Progressive and some other insurance companies in Michigan, will get nothing if they are badly hurt, because the coverage becomes meaningless as insurance companies get to deduct mandatory no-fault insurance benefits from the UM policy.

This practice is not right, and it’s not fair.

On Sept. 29, I will be testifying in Lansing before the Michigan Legislature about what happened to Amie. Our hopes are that the Michigan Office of Financial and Insurance Regulation will rule that insurance companies cannot put set offs in their provisions.

As Amie’s attorney, I handled her auto accident case pro-bono, and did not charge her anything for my time or costs because I was so outraged by what Progressive had done to her. But I also want to prevent what happened to Amie from happening to others. Hopefully the politicians in Lansing will be listening.

Please read the letter I wrote to the Michigan insurance commissioner about Amie’s injustice.

How to Protect Yourself

In Michigan, uninsured motorist coverage is an optional coverage, meaning it is not mandatory and people who want it can pay a higher premium to protect themselves. Being that 50 percent of all drivers in Detroit are uninsured, our no-fault insurance lawyers strongly recommend this coverage to all of our clients and friends.

If you are purchasing or currently have UM, review the section on uninsured drivers in your contract, and check for set off provisions. Most insurance companies do not have them, because it’s such a disgusting, unfair practice. If you have been in a car accident or truck accident, and are unsure about the language on your policy, you can call one of our no-fault lawyers at (800) 777-0028 for a free case evaluation.

– Steven M. Gursten is recognized as one of the nation’s top experts in serious car and truck accident injury cases and automobile insurance no-fault litigation. Steve has received the largest jury verdict for an automobile accident case in Michigan in four of the past seven years, including 2008, according to Michigan Lawyers Weekly.

Michigan Auto Law is the largest law firm exclusively handling car accident, truck accident and motorcycle accident cases throughout the entire state. We have offices in Farmington Hills, Detroit, Ann Arbor, Grand Rapids and Sterling Heights. Call (800) 777-0028 for a free consultation with an auto accident attorney.

Disclaimer: This information is for general informational purposes only and should not be relied upon as legal advice without consulting with a licensed attorney. This is not intended to substitute for the advice of an attorney. The law is subject to frequent changes and varies from one jurisdiction to another. Some of the information on this site may be deemed attorney advertising in some states. No attorney-client relationship is formed nor should any such relationship be implied. Past results are no guarantee of future results. A licensed attorney responsible for the content of this site can be reached at (800) 777-0028.